IN PLAIN ENGLISH
Roughly what your debts will cost you in interest over the next year.
FULL DEFINITION
The interest on your debts over the next twelve payments, from each one's rate and balance.
EXAMPLE
A £2,000 credit card at 20% APR that you pay £100 a month on costs about £322 in interest over the next twelve payments, as the balance falls; with no payment entered it's 2,000 × 20% = £400 a year.
HOW IT'S CALCULATED
A mortgage: see Mortgage Interest. Any other debt with a rate and a monthly payment: each month's interest is the balance × the rate ÷ 12, the payment is taken off the balance, and the twelve months are added up, so the figure falls as the balance does. With a rate but no payment: a year's interest on today's balance (balance × rate), as if nothing were paid off. With no rate it's left out and counted in a note. It is the lender's interest, not fees or penalties, and a card's real rate can change.
Educational content only. It is not personal financial advice.